Got money to burn? Invest in medical-pot fund

Seeking to capitalize on the growing market for medical marijuana, a venture capital firm in Newport Beach plans to begin investing in legal cannabis businesses.

Ghost Group, started late last year, announced Wednesday the launch of Emerald Ocean Capital, a fund that will make early-stage investments primarily in technology companies in the medical marijuana market.

"Marijuana is a tremendous business opportunity," said Justin Hartfield, cofounder and general partner of Ghost Group.

Hartfield, 29, got into the marijuana business in 2008, when he helped start WeedMaps.com, a Yelp-like website with information on pot dispensaries. He said the company now pulls in monthly revenue of $1.5 million.

To start Ghost Group, Hartfield said he and his partner, Doug Francis, put in about $1 million of their own money. The firm has been in contact recently with a number of investors interested in the new cannabis fund and Hartfield hopes to raise at least $10 million.

The firm plans to make investments between $50,000 and $1 million in startups.

Robert Frichtel, managing partner of Medical Marijuana Business Exchange, a firm which helps connect vendors and service providers, said business opportunities in the medical marijuana market have drawn the interest of both individual and institutional investors.

"That is something that is red hot right now," he said. "The investment community is actively seeking ways to participate in medical marijuana."

Kennedy, whose firm acquired Newport Beach-based website Leafly, said he has received "thousands of emails" from companies seeking investment capital over the past few months.

Investor enthusiasm for cannabis companies has grown along with the public's increasingly favorable attitude toward pot.

A Pew Research Center poll in April found that 52 percent of Americans support the legalization of marijuana, the first time in the poll's history that a majority favored legalization.

Though marijuana remains illegal under federal law, 19 states – including California – and the District of Columbia have approved to varying degrees the use of cannabis for medicinal purposes. In November, voters in two of those states, Colorado and Washington, legalized recreational pot use.

Hartfield said the momentum favors legalization, which could open up opportunities in a potentially lucrative market. "The dominoes of prohibition are going to fall very soon," he said. "When that happens, there are going to be lots of people who profit."